There are no clear bankruptcy laws for Limited Liability Companies in place. Hence, when any such company files for bankruptcy,
The United States Bankruptcy Code needs to rely on state laws for taking the appropriate decision. Although there are no set rules, but an LLC is now regarded as a legal entity.
For legal purposes, an LLC is considered as an individual and the bankruptcy is filed under Chapter 7. If it has one-member, then it is considered as a partnership and it can go for liquidation. More than one member means the LLC is a corporation and the members have a chance of getting a share of the company’s assets at the time of liquidation. The LLC may lose its existence, but its debts don’t get discharged.
When an LLC has more than one member it is imperative that all of them have their consent for bankruptcy filing, unless an agreement gives one or more members exclusive management rights.
If members of the LLC have guaranteed the debts of the company personally, then the creditors or the trustee can ask them to repay the debts. An LLC is not affected by members’ personal debts. Discussing your case details with a local bankruptcy lawyer can be really helpful